Debunking Medicare Myths: Drug Rebates for Dual Eligibles

Excerpt from Center for Medicare Advocacy: (click for entire article)

In the midst of ongoing deficit reduction proposals and negotiations, policymakers are considering a wide array of approaches for cutting spending and saving federal dollars. The Center for Medicare Advocacy recently wrote of ways to strengthen the Medicare program while tackling our deficit in a responsible manner that does not endanger the care of Medicare beneficiaries or their families.[1] Included in our analysis was a proposal that would save taxpayers billions of dollars: reinstating drug rebates currently available to Medicaid beneficiaries to those dually eligible for both Medicare and Medicaid (Duals). Since Duals received their prescription drugs through Medicaid prior to the implementation of Medicare Part D, their drugs were subject to the Medicaid rebates through 2005. Simply reinstituting such rebates could save more than $200 billion over ten years.[2] This alert addresses some common misconceptions about the merits of reinstating such drug rebates.

Myth: Competition among private plans in the Medicare Prescription Drug Program (Part D) program slowed increases in drug prices

Truth: On the contrary, evidence shows that drug prices in general soared after Part D was established and the cost of medications for the 9 million dually-eligible beneficiaries in particular increased when the duals began receiving drugs through Medicare Part D plans. In 2005, before Part D was enacted, the average retail cost of brand-name drugs for individuals with chronic conditions, largely duals, was $1,049. That cost rose over 30% by 2009 to $1,382.[3]  In the 12 months before March 2010, the cost of brand-name prescriptions most widely used by Medicare beneficiaries, including duals, rose by 9.7%, far above the 0.3% inflation rate for the same period. The increased cost has been shifted to Medicare and consequently to all U.S. taxpayers.